Deal for Caspian Gas Pipeline Signed

Presidential Press ServiceNazarbayev and Putin speaking by telephone with Berdymukhammedov during a meeting in the Kremlin on Thursday.
Russia, Kazakhstan and Turkmenistan signed a landmark agreement Thursday to build a natural gas pipeline along the Caspian Sea coast that would strengthen Moscow's monopoly on energy exports from the resource-rich region.

The deal, which follows a preliminary agreement reached in May, ended months of tense arguments over the price of gas supplies. It reaffirms Russia's monopoly on gas supplies from Central Asia and deals a strong blow to Western hopes of securing alternate energy export routes.

"We have just signed an extremely important agreement among Russia, Kazakhstan and Turkmenistan on building the Caspian pipeline," President Vladimir Putin said. "It will become a new, important contribution of our nations into strengthening European energy security."

The agreement was signed after Putin's talks in the Kremlin with Kazakh President Nursultan Nazarbayev and their conference call with Turkmen President Gurbanguly Berdymukhammedov.

Following months of disputes over gas prices, Gazprom gave in to Turkmen price demands last month and agreed to pay $130 per 1,000 cubic meters of natural gas in the first half of 2008 and $150 in the second half.

The new pipeline deal will likely disappoint the United States and the European Union, which have been lobbying for a rival pipeline to be built under the Caspian Sea, bypassing Russia.

Adding to the West's grievances, Nazarbayev also said after the talks that his country would increase oil exports to Russia.

Russia has pushed strongly for control over energy exports from the Caspian, while Nazarbayev and Berdymukhammedov have expressed interest in undersea pipelines and voiced support for multiple export routes.

Prospects for pipelines under the Caspian have been clouded by high costs, environmental concerns and disputes over resource ownership.

The legal status of the Caspian has been in limbo since the 1991 Soviet collapse, leading to tension and conflicting claims to seabed oil deposits and other sea riches.

The five Caspian Sea nations -- Iran, Azerbaijan, Kazakhstan, Turkmenistan and Russia -- failed to agree on how to divide the sea's riches at their latest summit, in Tehran in October.

Russia and Iran warned outside powers to stay away from the region, and Putin underlined that all pipeline projects should require approval by all five nations.

Turkmenistan, which has the largest natural gas reserves in the former Soviet Union after Russia, ships gas to Russia along a pipeline that has an annual capacity of 50 billion cubic meters.

The new pipeline would have an initial annual capacity of 20 bcm, and it could grow significantly in the future.

Industry and Energy Minister Viktor Khristenko said the new pipeline would be built by 2010.